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Vo lume 4 2006 Otago Managem en t Gradua t e Rev iew

This assignment was for MANT 406 Topic in Industrial Relations, 25-35Supervised by Prof. Alan Geare

Em ployees Responses t o H igh Per f o rm ance W ork

Syst em s: Assessing HPW S Ef f ect iven ess

Shan non Hegan

Abs t rac tThe purpose of this paper is to identify the effects that high performance work

systems (HPWS) have on employees, in an attempt to ascertain the effectivenessof HPWS. The specifics covered in this paper include organisational commitment,the resulting effect HPWS had on work-family balance for employees, relations

with management, job satisfaction, and the resulting stress caused by HPWS.The findings identified that HPWS do not, in practice, necessarily engender

continuance of commitment to an organisation. The reasoning behind this comes

through HPWS increasing employee discretion which in turn increases effort. Thiseffort creates an increase in work pressure and strain which spills over into thehome domain. As employment continues HPWS have a smaller impact onimproving job satisfaction with it diminishing to levels prior to HPWS

introduction. With lowered job satisfaction and increased work pressure, relationswith management becoming strained. This identifies a possible path for

employees to exit an organisation as a result of HPWS. It was therefore identifiedthat HPWS in practice struggle to achieve their most basic premise of increasingperformance.

Em p loyee React i on s to H igh Per f o rm ance Wor k System sIt is bizarre that although human resource management (HRM) relates to theeffective management of employees, we know remarkably little about how

employees, as subjects of HRM, react to its practice (Grant & Shields, 2002). Thedominant stream of research within the field of HRM has explored the link

between HRM and organisational performance. Indeed, the general consensus isthat this field of literature provides evidence that supports such an association(e.g. Arthur 1994; Huselid 1995). The possible reasoning behind the push to

associate HRM with increased performance is to bring credibility to and indicate

the need for HRM in the workplace.The focus on establishing a link between HRM practice and organisational

performance has resulted in very little attention being given to the effects ofsuch practices. This failure to provide an adequate basis for understanding thelink between HRM practice and employees reactions is highlighted by a number

of commentators (Bacon, 1999; Guest, 1999; Gibb, 2001). With this lack ofresearch into employees reactions to HRM practices, we are unable to effectivelyevaluate HRM on a number of counts (Grant & Shields, 2002). It is contendedthat to gauge a meaningful evaluation of HRM, research must have an accurate

understanding of (1) what HRM is; (2) how workers react to it being practiced onthem; and (3) why such relations occur (Grant & Shields, 2002). Furthermore,

the increasing need for studies of employee reactions also becomes morepertinent, given that there is an increasing interest in the notion of employees as

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stakeholders or partners in the enterprise (Guest, 1999). Thus, the need for validand accurate assessments of employee reactions to HRM has never been greater.

Employee focused studies are a welcomed occurrence, due to this

apparent lack of investigation into the effect HRM practice has on employees(Grant & Shields, 2002). Recent studies in employee centred literature have

focused primarily on bundles of HRM (and non-HRM) employment practices(Grant & Shields, 2002). The study of these bundles indeed provides good insightinto the general effect HRM practices have on employees; however the effects ofindividual practices on their own have not been investigated. Therefore, the

purpose of this study is to do just that, by focusing primarily on the reactionsemployees have towards high performance work systems. This paper will

critically analyze the research conducted on the reactions employees havetowards high performance management practices, in an attempt to ascertainwhether or not HPWS are indeed useful.

Prior to delving into the literature, it is important for the purposes of thispaper to determine how to best characterise the practices under discussion and

to also highlight what these practices constitute. There are many labels given tothis area of HRM. The predominant labels include high performance

management (White, Hill, McGovern, Mills, & Smeaton, 2003), high involvementmanagement (Lawler, 1986) and high commitment management (Wood & de

Menezes, 1998). High involvement is used by some to emphasise theimportance of enhanced opportunities for employees to make decisions andexercise discretion. Others, as highlighted, prefer to use the term highcommitment to highlight the role of effective management in enhancing

employee commitment and thereby reducing the need for managerial control.Nonetheless, there remains considerable overlap between the practices

associated with each approach. For the purposes of this study, and given thenature of its aim to collate themes that arise from employee reactions, the termHPWS (high performance work systems) will be used on the basis that it issufficiently broad enough to encompass the range of practices emphasised by

different approaches (Ramsay, Scholaries, & Harley, 2000).

Organ isat ion a l Per fo r m ance

High performance work systems claim to increase organisational performance. Itis crucial therefore to analyse whether or not these systems actually achieve the

simple purpose they were devised to fulfil. There is a substantial and growingbody of research which claims to show that enormous economic returns can beobtained through the implementation of HPWS (Pfeffer & Veiga, 1999). There aremany indicators other than pure financial figures that indicate an increase in

organisational performance (Huselid, 1995). One such indicator is the actualbehaviour of employees, through the way they affect turnover and labour

productivity (Huselid, 1995).Eliciting superior employee performance, which in turn increases

organisational performance, comes from HPWS in the form of developingindividuals to their full potential and motivating these individuals to apply their

skills and abilities to their work-related activities (Way, 2002). This section willnot delve into the issue of workforce turnover but will focus on the contentious

issue of productivity. Way (2002) purports that HPWS result in an increase inlabour productivity in small US firms. Further evidence comes from Delaney andHuselid (1996, p. 965), whereby it was concluded that, the widely asserted

assumption that people are the pre-eminent organizational resource and the keyto achieving outstanding performance was indeed a credible observation. Thus

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the simple premise that HPWS improve organisational performance seems to betrue. These brief results alone do not fully explain the degree to which HPWScreate increased performance. The following sections will help to further answer

this. The identification of HPWS adding value to an organisation throughincreasing performance is meaningless unless one has a grasp of exactly what

the literature views as HPWS.According to Pfeffer (1996) high performance work systems embraceemployment security and high wages as well as communication and involvementschemes. Furthermore, we would see HPWS incorporating some sort of

combination of schemes to promote employee discretion and autonomy such asteam work, quality circles or problem solving groups, systems of communication

that allow for upward communication of employee suggestions as well asdownward communication from management, and serious attention todeveloping employee skills (Edwards & Wright, 2001, p. 570).

Proponents of the HPWS approach stress that its application will improveorganisational performance (Ramsay et al., 2000; Harley, 2002; White et al.,

2003). It was identified by Harley (2002), that there is consensus amongstresearchers who have sought to demonstrate a link between HRM systems and

organisational performance that the performance outcomes arise chiefly becausethe HRM practices improve employee orientations to work, which in turn makes

them more productive. The causal path assumed by most proponents of HPWS isas follows (Edwards & Wright, 2001, p. 570).

Systems are established; they influence workplace practice; employee

attitudes change, with increased satisfaction or commitment; there is aconsequent effect on behaviour; and this in turn feeds through to theperformanceof the work unit and eventually the company

The assumption has been made by HPWS theoretical models that anyperformance gains are necessarily attributable to a positive impact on

employees, chiefly through increased autonomy, satisfaction and commitment(Harley, 2002). Harley (2002, p. 421) states that two alternatives have been

overlooked: (i) improved performance may be driven by factors other than HRMpractice; and (ii) improved organisational performance may arise via negativeoutcomes for workers. Therefore, the following analysis will endeavour to identify

whether employees reactions do indeed elicit increased autonomy, satisfactionand commitment.

Organ izat ion a l Per fo r m ance and Nega t i ve Ou t comes fo r Work e rs

Commitment

As stated above, proponents believe that HPWS have a positive effect onemployee commitment which in turn leads to increased performance. Therefore,this part of the paper will attempt to identify what the effect truly is, whether it ispositive or negative. The definition of commitment adopted here is:

the relative strength of an individuals identification with and

involvement in a particular organisation, which is characterised bythree related factors, strong belief in and acceptance of theorganisations goals, a willingness to exert considerable effort on

behalf of the organisation, and a strong desire to maintain membershipof the organisation (Mowday, Steers, & Porter, 1979, p. 226).

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Prior work on turnover has examined the determinants of both individualemployees departures and aggregate organizational turnover (Huselid, 1995).Previous research concluded that perceptions of job security, the presence of a

union, job satisfaction, organisational tenure, demographic variables such asage, gender, education, and number of dependents, organisational commitment,

whether a job meets an individuals expectations, and the expressed intention tosearch for another job were all predictive of employees decision to leave (Arnold& Feldman 1982; Cotton & Tuttle, 1986).

High performance work systems aim at reducing turnover, absenteeism

and costs through a reduction in the need for control and monitoring (Ramsay etal., 2000). Furthermore, so-called HPWS create high trust, high involvement,

high intrinsic satisfaction, high skill and control and as a result, high commitment(Scholarios & Ramsay, 1999; Harley, 1999). With these objectives as they maybe termed, it is important to analyse the actual affect of HPWS on organisational

commitment.Findings that support these objectives as stated above, comes from

Ramsay et al. (2000) whereby there was a positive correlation between HPWSand employee commitment. It was identified that the resulting regression

equations performed on employee attitudes showed a score which had a positiveand statistically significant effect. However, contradictory evidence came out of

the same study, whereby there was one group of system practices (identifiedtwo HPWS system practices) which showed a negative statistically significantrelationship with commitment (SWP1), and the other no effect (SWP2) (Ramsayet al., 2000). Explaining these results begins by looking at what made up these

two systems. System one included such things as EEO policy, employee unionrepresentation, and family-friendly policies amongst other things. The second

system included grievance procedures, formal teams, appraisals and formaltraining (Ramsay et al., 2000). It is this authors view that SWP1 could belabelled a politically correct system. Attributing a label to SWP2 is much moredifficult as the variables contained within it seemed unrelated.

A possible explanation of the results identified for SWP1 can be found inthe affirmative action literature. Affirmative action is an important and generally

controversial policy, which is used to combat differences between groups inearnings and employment (Coate & Loury, 1993). Affirmative action programmesidentify unfair or uneven practices and prescribe rules that favour the

disadvantaged group (Schotter & Weigelt, 1992). The relevance of this literatureis that SWP1 is made up of affirmative action policies such as EEO, and familyfriendly policies. Furthermore the effects that affirmative action could have onemployees are identified by Kuklinski et al. (1997). Kuklinski et al. (1997)

identified that in the minority groups that receive affirmative action the result willbe an increase in performance and commitment when the disadvantage was

severe. Furthermore, it was identified that those not in the minority groupexpressed considerable dislike for affirmative action and would often attempt toresist it. In the authors view the dislike and resistance shown by the nonminorities could be a possible answer as to why SWP1 resulted in a negative

effect on commitment. When one is outside the scope of the affirmative actionsrange and when the disadvantage for the minority group was minor, it was

identified that there would be a drop in overall performance and satisfaction inboth groups. Therefore, this drop in satisfaction could result in a decline inemployee commitment.

With these results in mind, there is still the case of the statisticallysignificant regression equations of employee attitudes, which showed that HPWS

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had a positive effect on commitment. This result simply shows that we can bereasonably certain that the results are not caused by sampling error.Furthermore in the authors view, although the result shows a real difference, it

is so small that it is not applicable in reality. Therefore, it can be concluded fromRamsay et al. (2000), that high performance work systems may have a

marginally positive effect on employees attitudes to commitment (which can bedebated) but an overall negative effect on employees actual commitment.Further evidence of the effect of HPWS on employee commitment comes

from Arthur (1994). These results were contradictory to Ramsay et al. (2000), in

that the adoption of HPWS resulted in a dramatically lower turnover ratecompared to control systems, and increased performance (Arthur, 1994). It was

identified however, that the results for the regression analysis of the variablesused against the commitment system were not significant. The difficulties posedhere then are that the Human Resource System variable adopted in this study

was one of the variables found to have an insignificant relationship and hence itmust be interpreted with some caution.

Harley (2002) identified that HPWS were negatively associated withemployee continuance commitment. The workplace practice of high involvement

creating commitment was statistically insignificant.Thus, from the literature discussed above, it can be concluded that the

myth of thinking HPWS result in an increase in employee commitment is justthat, a myth. The results from Ramsay et al. (2000) showed that actualcommitment was negatively affected by HPWS. Furthermore Arthur (1994)looked at performance gains from enhanced commitment and any resulting

turnover. These results identified an apparent statistically significantrelationship between commitment and performance; however one performance

variable returned an overall insignificant result. The issue that arises here is thatthe Human Resource System Variable in this model, which shows the significantrelationship between commitment and performance must be interpreted withsome caution. Furthermore Harley (2002) identified that high involvement

practices have a negative effect on continuance commitment.Therefore from the analysed results above, it has been identified that

although in theory HPWS should elicit commitment, it has been identified that inpractice this is not necessarily the case. Although there were some resultsshowing a positive effect, these are highly suspect as stated by the author.

Having identified evidence that HPWS do not necessarily elicitcommitment, a discussion on why this occurs is needed. This discussion willfocus on team work in an attempt to elicit a possible reason. The purpose ofanalysing teams is that they increase autonomy and allow for greater discretion

over work, which are all aspects of HPWS (Edwards & Wright 2001). Kirkman andShapiro (1997) identify the self-managing work team, (SMWT hereafter). These

work teams consist primarily of two dynamic components; (1) the process ofself-management & (2) collaborative teamwork (Kirkman & Shapiro, 1997).

The concept of self managing teams is closely linked to what is termed concertive control (Baker, 1993). Concertive control is whereby the group or

team is given the power to control themselves as opposed to managementtraditionally holding it (Baker 1993). Employees typically develop a behavioural

premise of ideas norms, or rules that enable them to act in functional ways forthe organisation (Baker 1993). These new values that individuals within theteams have manifest into a supervisory force that guides the groups every

action (Baker 1993). This concertive control formulated by the individualsthemselves, fermented hostility towards both managements goals of making the

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teams fully self-managed and also the actual goals of the firm (Baker, 1993;Ezzamel & Willmott 1998; Sewell 1998). Therefore this hostility towardsmanagement and their goals could be directly linked into continuance

commitment to the organisation. Thus with the control that team members exertover themselves in order to reach functionality for the organisation, they are in

turn bringing into effect a power that has the ability to dwindle commitment tothe organisation. Baker (1993) reported that workers in these self managingteams were reporting that they felt they were under much more control nowthan they were prior to the introduction of self managing teams. The result of

this was reported as an increase in work pressure to conform to the group normsand greater dislike towards management (Baker 1993).

Work-Life Balance and Work I ntensificationThroughout the literature it is purported that HPWS have a positive effect on

employees discretion (White et al., 2003; Harley 2002). In particular there areclaims that specific practices such as group work and the formation of teams aids

in this positive affect. This concept of discretion is the employees ability tomake good choices, be careful, and have the freedom of choice (Harley 2002). It

was identified in Harley (2002) that HPWS have a positive effect on discretion.The results showed a significant and positive association to team building, which

was further supported by White et al. (2003).The purpose of highlighting this association is that the effect of this

increased discretion is that it may have repercussions beyond the workplace.White et al.(2003) examines this possibility through a detailed look into the

impact that working hours and selected high-performance practices have onnegative job to home spillover.

In todays media saturated society, it is thought that employees choosedemanding jobs to fulfil material ambitions in a consumer society that hasdeveloped powerful forms of advertising and credit purchase systems (Schor,1991). Therefore many workers felt obliged to accept high work demands simply

to service their personal debt (Schor, 1991). Schor (1991) investigated theincreasing number of hours worked by employees in a typical week. This

discussion however did not review the practices the employers were makingtheir employees adhere to, and the pressure to work long hours, just thereasons for why an employee should feel compelled to do so.

White et al.(2003, p. 177) proposes that it seems plausible that high-commitment or high-performance management will have a negative impact onthe home domain of workers to the extent they are designed to elicit greaterdiscretionary effort in pursuit of the organizations goals. This negative impact is

counterproductive for many of the claims that state that HPWS are good for boththe employee and the employer. Employers it is argued, gain through improved

quality, productivity and financial returns, whilst employees benefit from higherwages and job satisfaction (Huselid, 1995). Evidence shows that this is not thecase, with Ramsay et al.(2000) identifying that HPWS are associated withemployees experiencing job strain, and lower pay satisfaction, while Godard

(2001) identified that Canadian employees reported that high levels of adoptionof these practices are linked with low job satisfaction and self-esteem, possibly

because the work is considered to be more stressful. Evidence is vast, whichchallenges the claims that employees gain from HPWS (White et al.2003).

With these findings in mind it is therefore important to assess the degree

to which this job strain and increased stress spills over into the home domain.White et al.(2003) identified that high performance practices were a major

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contributor to this negative job-to-home spillover. Practices such as appraisalsystems had a significant effect on increasing this spillover for both men andwomen. Other theoretically significant results concerned group or team

motivational practices. It was identified that there was a tendency for group-orientated practices to further perpetuate this form of work family conflict,

particularly in the year 2000 compared to 1992 (White et al.2003). This findingsuggests that group-orientated work is playing an increasingly larger role in workdemands today. In 1992 performance related payment systems had a significantimpact on reducing this negativejob-to-home spillover (White et al.,2003). This

impact showed considerable change in time, and by the year 2000 thisrelationship had become smaller and non-significant. The only high performance

practice that showed a reduction in negativespillover was the adoption of flexibleworking hours albeit for women only (White et al.,2003).

These results have shown that work place practices, in particular, high

performance practices, increase the negativejob-to-home spillover (White et al.,2003). There were considerable gender differences with men being less affected

by group work practices compared to women, and men not benefiting at all fromthe introduction of flexible working hours (White et al.2003). Furthermore it was

identified that the largest influence on negativejob-to-home spillover came fromactual hours worked. White et al. (2003) stressed that as the hours worked

increased, so too did the pressure they felt, which resulted in an increase innegativespillover.

The concept of work intensification includes not only the longer hours thatan employee works, but the pressure created from having a more highly skilled

workforce (Green 2001). When one looks at work intensification primarily from aperspective of increased hours, it is interesting to note that people work far

fewer hours than those immediately after WWII (Green 2001). Furthermore inrecent years the average hours worked have changed very little with only a slightincrease (Green 2001). Thus the question must be asked, Where is this workintensification coming from?

Metcalf (1994 cited in Edwards et al.2001) identifies that workers in theUK report work effort is increasing, and that there was a fear-factor associated

with job loss in the 1980s. Therefore with the increase in work intensification andno apparent increase in hours worked, it could be posited that indeed HPWSinduces increased discretion which in turn elicits an increase in effort.

Furthermore this increase in work effort will perpetuate the feelings of pressureand strain at work. The additional effect of self managing work teams as notedby Baker (1993) creating constant pressure furthers perpetuates this outcome.

Job Satisfaction and Relations with ManagementHarley (2002) purports that job satisfaction was positively associated with the

HPWS practice of quality circles. It is important to clarify just what quality circlesare, in order to further discuss their effect on job satisfaction. Quality Circles aregenerally defined as small groups of volunteers from the same work area whomeet regularly to identify, analyze, and solve quality and related problems in

their area of responsibility (Griffin, 1988). Further supporting evidence showingan increase in job satisfaction as a result of quality circles comes from (Griffin

1988), whereby it was identified that quality circles had a moderately positiveincrease in job satisfaction over a period of time. It is important to note howeverthat this increase was not stable over time and eventually decreased back to its

original level. This suggests that quality circles do have a positive effect on jobsatisfaction; however this effect is only short term in nature.

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The effect that HPWS had on relations with management was both smalland very hard to explain. It was identified that employee attitudes tomanagement were negatively associated with employment security (Harley,

2002). This suggests that the greater the proportion of employees employed ona permanent full-time basis, the more negative the employee perception of

management will be. These results are difficult to explain but they contrast withthe traditional view that offering employment security will lead to more positiveorientations for employees (Albrecht & Travaglione, 2003; Jones & George, 1998cited in Ferris & Travaglione, 2003).

Discuss ionThe findings identified in this paper show that HPWS sufficiently fulfil their basicpremise of increasing performance (Delaney & Huselid, 1996; Way 2002).

However it is important to discuss the fact that Huselid (1995), a reputableresearcher in this area, stated that HPWS increase performance through a

number of avenues, with one of these being employee behaviour. This employee

behaviour affects turnover and labour productivity within the organisations(Huselid, 1995) thus eliciting employee commitment, which is in direct contrastto turnover. Findings in this paper suggest otherwise (Ramsay et al., 2000;

Harley, 2002; Arthur, 1994). It was however identified that HPWS do notengender commitment to an organisation as was once thought. Furthermore, thescant results that supported Huselids findings were to be interpreted with some

caution, due to the relevant variable being insignificant. Explaining a possiblecausal relationship was done through an analysis of the effect self-managing

teams had on organisational commitment. It was identified that these teamsgenerate their own rules and norms which in turn creates an immense powerover its members to conform to them. The result of this being an increase in

work pressure and strain, which inevitably causes turnover.Further findings identified that HPWS did increase discretion of employees

(Harley, 2002; White et al., 2003). It was argued however, that this increase in

employee discretion played a significant part in creating the negative job-to-home spillover. With discretion being the ability of employees to make gooddecisions, be careful and have freedom of choice this means that employees aregiven considerably more responsibility which in turn requires greater effort and

in particular longer working hours. However, it was identified that work hourshad not increased, in fact since shortly after the end of WWII they had actually

been on the decline. Furthermore, it was identified that working hours had onlyslightly increased and could not be accountable for the increase in work

intensification. It was identified that a possible origin of this work intensificationcame from the increase in work effort which was transcribed through HPWS

creating an increase in employee discretion.The concept of job satisfaction in relation to HPWS showed a positive

relationship. Evidence from Griffin (1988) and Harley (2002) showed a

statistically significant relationship between quality circles and job satisfaction.However the continuance of job satisfaction was relatively low. Griffin (1988)

identified that ongoing job satisfaction was unlikely, due to the fact thatemployee satisfaction followed a bell curve almost, whereby their satisfactionpeaked and then returned to its origin level.

The results from job satisfaction may offer a possible answer for the

findings relating to employee relations with management. It was identified thatemployee attitudes to management were negatively associated with employment

security (Harley, 2002). This simply meant that the longer an employee was

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employed the more likely they were going to generate feelings of dislike towardsmanagement. Therefore, the findings regarding job satisfaction and the resultingdiscussion add validity to these findings.

Prior to drawing conclusions on this paper, it is important to note that thisfield of research, that being employee centred research regarding the effect of

HPWS is relatively new. The important result of this is that current researchers inthis field have been either adopting or adapting surveys or their data for thepurposes of analysing this effect. Through not having an accurate measurementtool specifically tailored to this specific issue, this generates thoughts of its

generalisability. Furthermore when one is interpreting survey data, it is obviouslyconfined to that individuals perception of it.

In conclusion, this paper has identified that HPWS may result in amarginal increase in performance. The effectiveness of HPWS is diminishedthrough the lack of continuance commitment which can be directly related to the

increased discretion which increases negative job-to-home spillover. Thus asEdwards and Wright (2001) proposed a causal path of HPWS, this author to

would like to propose another one on the effectiveness of HPWS.HPWS increase individual employees discretion. This discretion results in

an increase in effort which in turn creates increased work pressure and strainthat culminates in negative job-to-home spillover. As employment continues,

good relations with management diminish and as a result the organisationstruggles with continuance commitment. The result is turnover, which is widelyviewed as being detrimental to organisational performance.

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